SinoCoking Coal and Coke Chemical Industries Announces Fiscal 2013 Third
Quarter Financial Results
PR Newswire
PINGDINGSHAN, China, May 14, 2013
PINGDINGSHAN, China, May 14, 2013 /PRNewswire-FirstCall/ -- SinoCoking Coal
and Coke Chemical Industries, Inc. (Nasdaq: SCOK) (the "Company" or
"SinoCoking"), a vertically-integrated coal and coke processor, announced
today its financial results for the fiscal 2013 third quarter ended March 31,
2013.
Fiscal 2013 Third Quarter vs. Fiscal 2012 Third Quarter
oTotal revenue was $13.9 million, as compared to $16.8 million.
oGross margin was 15.0%, as compared to 15.7%.
oNet income, including foreign currency transaction adjustment, was $1.2
million or $0.02 per diluted share, as compared to net income of $2.1
million or $0.07 per diluted share.
Fiscal 2013 Third Quarter Fiscal 2012 Third Quarter
Product MT* Weighted Revenue % of MT* Weighted Revenue % of
type Sold Average (million) Total Sold Average (million) Total
Price/MT* Revenue Price/MT* Revenue
Coke Products
Coke 38,220 $ 212 $ 8.1 57.6% 37,111 $ 230 $ 8.5 50.7%
Coal Tar 1,357 $ 258 $ 0.4 2.9% 1,563 $ 257 $ 0.2 1.1%
Coal Products
Raw Coal 11,281 $ 58 $ 0.7 4.7% 15,778 $ 88 $ 1.3 8.0%
Washed 27,295 $ 177 $ 4.8 34.7% 38,425 $ 176 $ 6.8 40.2%
Coal
*metric ton
Discussing fiscal 2013 third quarter financial results, SinoCoking's Chairman
and CEO, Mr. Jianhua Lv, noted, "The ongoing mining moratorium continues to
limit raw coal supplies in Henan. In addition, operations at our four coal
mines remain idle, and we must continue to meet our coal requirements from
other provinces."
The 17.3% decrease in total revenue for the quarter was due to:
oApproximately $2.0 million decrease in washed coal revenue resulting from
lower sales volume despite a slightly increased average selling price;
oApproximately $0.6 million decrease in raw coal revenue due to limited
supply, as well as decreased average selling price; and,
oApproximately $0.4 million decrease in coke revenue mainly due to lower
average selling price despite the higher sales volume.
Of note, decreases in washed coal, raw coal and coke revenue were slightly
offset by an increase in coal tar revenue due to higher average selling price,
despite the decreased sales volume."
Recent business highlights:
Mr. Lv added, "Over the last several quarters, we have seen a slight but
steady improvement in coke demand, mainly from steel mills. Thus, since the
beginning of fiscal 2013, we have taken steps to position SinoCoking to take
advantage of market opportunities that may arise if demands for coal, coke and
coke by-products recover in fiscal 2014. Such steps include:
Upgrading technical capabilities of our existing coking facility
oTo reduce our dependency on high cost raw materials, such as coking coal,
we upgraded our existing coking facility, which has an annual production
capacity of 250,000 metric tons. The facility can now produce high quality
coke and coke by-products using low cost raw coal, such as long flame
coal. We also upgraded oven capabilities to improve their energy
efficiency, capture additional by-products for refinement into high
value-added chemical products, and satisfy strict environmental
requirements.
Resuming construction of the new coking facility
oIn April we resumed construction of our new facility, which we plan to
complete before fiscal 2014 year-end. Trial production will start
immediately after construction. Additionally, we received approval from
local authorities to increase the facility's designed annual production
capacity from 900,000 metric tons to 1.2 million metric tons. Such
increase, if implemented, would enable us to further expand our product
offering by recapturing additional coke by-products for refinement into
high value-added chemical products. This fits well with our business plan
to focus on increasing our market share in China's coal chemical industry
which has been growing rapidly.
Signing a leasing agreement to operate a 200,000 metric tons coking facility
for a period of one year
oTrial production at our recently leased coke production facility began on
April 24, 2013. This facility is approximately 3 miles from our existing
coking facility and rail yard. We have started work to improve both the
efficiency of the coke ovens and the quality of the coke produced at this
facility, and will gradually increase production to full capacity. Coke
by-products such as crude benzol, sulfur, sulfur ammonia and purified coal
gas will be produced at the same time, thereby increasing our product
portfolio. Through operating this facility, we aim to gain and hone the
skills needed to operate and manage its new type of coke ovens, which will
be a valuable experience once our state-of-the-art coking facility is
completed and becomes operational.
Continuing to invest to improve safety of our coal mines
oAs required by the Henan government, we are upgrading the safety-related
systems at our coal mines in order to be approved to resume our mining
operations. We are also in the process of merging the operations of
Hongchang mine, Shunli mine and Shuangrui mine. To date, we have invested
a total of approximately $27.9 million as follows:
a.Mine upgrades totaling approximately $35.0 million, 70% or approximately
$24.5 million to be paid by SinoCoking and the remainder by Henan Coal
Seam Gas, our joint-venture partner. To date, we have paid approximately
$17.0 million for these upgrades which are expected to be completed in
calendar year 2013.
b.Mine consolidation totaling approximately $32.0 million. To date, we have
paid approximately $10.9 million toward such integration. We expect to
complete such integration 4-6 months after we obtain clearance to resume
our mining operations, which clearance we expect to receive in calendar
year 2013"
Mr. Lv. concluded, "Due to the recent steps taken to increase production of
coke and coke by-products, we expect our top and bottom lines to substantially
improve in the final quarter of fiscal 2013 and in fiscal 2014. We currently
have coke production capacity of 450,000 metric tons annually, including the
200,000 metric tons we are leasing. Once construction of our new facility is
completed, our coking capacity will increase by approximately 1.2 million
metric tons annually."
Conference Call
Mr. Lv and Sam Wu, the Company's CFO, will host a conference call on Thursday,
May 16, 2013 at 10:00 am ET / 10:00 pm China time to discuss fiscal 2013 third
quarter financial results as well as recent corporate developments.
Interested parties may participate in the call by dialing: (201) 493-6744.
Please call in 10 minutes before the conference is scheduled to begin and ask
for the SinoCoking call. After opening remarks, there will be a question and
answer period. Questions may be asked during the live call, or alternatively,
you may e-mail questions in advance to lcati@equityny.com.
The conference call will also be broadcast live over the Internet. To listen
to the webcast, please go to
http://www.investorcalendar.com/IC/CEPage.asp?ID=170993 or visit the Company's
website www.sinocokingchina.com and then go to Presentations/Events page where
the conference call is posted. Please go to the website at least 15 minutes
early to register, and download and install any necessary audio software. If
you are unable to listen live, the conference call will be archived and can be
accessed for approximately 90 days. We suggest listeners use Microsoft
Internet Explorer as their web browser.
About SinoCoking
SinoCoking and Coke Chemical Industries, Inc., a Florida corporation, is a
vertically-integrated coal and coke processor that uses coal from both its own
mines and that of third-party mines to produce basic and value-added coal
products for steel manufacturers, power generators, and various industrial
users. SinoCoking has been producing metallurgical coke since 2002, and acts
as a key supplier to regional steel producers in central China. SinoCoking
also produces and supplies thermal coal to its customers in central China.
SinoCoking currently owns its assets and conducts its operations through its
subsidiaries, Top Favour Limited and Pingdingshan Hongyuan Energy Science and
Technology Development Co., Ltd., and its affiliated companies, Henan Province
Pingdingshan Hongli Coal & Coke Co., Ltd., Baofeng Coking Factory, Baofeng
Hongchang Coal Co., Ltd., Baofeng Hongguang Environment Protection Electricity
Generating Co., Ltd., Zhonghong Energy Investment Company, Henan Hongyuan Coal
Seam Gas Engineering Technology Co., Ltd., Baofeng Shuangri Coal Mining Co.,
Ltd., and Baofeng Xingsheng Coal Mining Co., Ltd.
For further information about SinoCoking, please refer to our periodic reports
filed with the Securities and Exchange Commission.
Forward Looking Statement
This press release contains forward-looking statements, particularly as
related to, among other things, the business plans of the Company, statements
relating to goals, plans and projections regarding the Company's financial
position and business strategy. The words or phrases "plans", "would be,"
"will allow," "intends to," "may result," "are expected to," "will continue,"
"anticipates," "expects," "estimate," "project," "indicate," "could,"
"potentially," "should," "believe," "think", "considers" or similar
expressions are intended to identify "forward-looking statements." These
forward-looking statements fall within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Act of 1934 and are
subject to the safe harbor created by these sections. Actual results could
differ materially from those projected in the forward-looking statements as a
result of a number of risks and uncertainties. Such forward-looking statements
are based on current expectations, involve known and unknown risks, a reliance
on third parties for information, transactions or orders that may be
cancelled, and other factors that may cause our actual results, performance or
achievements, or developments in our industry, to differ materially from the
anticipated results, performance or achievements expressed or implied by such
forward-looking statements. Factors that could cause actual results to differ
materially from anticipated results include risks and uncertainties related to
the fluctuation of local, regional, and global economic conditions, the
performance of management and our employees, our ability to obtain financing,
competition, general economic conditions and other factors that are detailed
in our periodic reports and on documents we file from time to time with the
Securities and Exchange Commission. Statements made herein are as of the date
of this press release and should not be relied upon as of any subsequent date.
The Company cautions readers not to place undue reliance on such statements.
The Company does not undertake, and the Company specifically disclaims any
obligation, to update any forward-looking statements to reflect occurrences,
developments, unanticipated events or circumstances after the date of such
statement. Actual results may differ materially from the Company's
expectations and estimates. The Company provides no assurances that any
potential acquisitions will actually be consummated, or if consummated that
such acquisitions will be on terms and conditions anticipated on the date of
this press release, and the Company makes no assurances with regard to any
results of any such acquisitions.
Contact:
SinoCoking Investor Relations Counsel:
Sam Wu, Chief Financial Officer The Equity Group Inc.
+ 86-375-2882-999 Lena Cati
sinocoking@sina.com lcati@equityny.com / (212) 836-9611
www.sinocokingchina.com www.theequitygroup.com
See Accompanying Tables
SINOCOKING COAL AND COKE CHEMICAL INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
For the Three Months Ended For the Nine Months Ended
March 31, March 31
2013 2012 2013 2012
REVENUE $ 13,903,951 $ 16,804,057 $ 52,704,787 $ 56,252,724
COST OF REVENUE 11,815,066 14,166,799 45,770,689 43,122,271
GROSS PROFIT 2,088,885 2,637,258 6,934,098 13,130,453
OPERATING EXPENSES:
Selling 37,018 43,602 122,775 168,469
General and 533,055 648,834 1,741,228 1,982,620
administrative
Total operating 570,073 692,436 1,864,003 2,151,089
expenses
INCOME FROM 1,518,812 1,944,822 5,070,095 10,979,364
OPERATIONS
OTHER INCOME
(EXPENSE)
Interest income 174,788 222,583 605,889 999,883
Interest expense (910,544) (302,746) (2,929,609) (1,033,768)
Other finance (94,547) (34,002) (257,914) (107,435)
expense
Other (expense) 219,838 (47) 228,171 (9,136)
income, net
Change in fair value 1,150 163,394 715,997 4,526,330
of warrants
Total other
(expense) income, (609,315) 49,182 (1,637,466) 4,375,874
net
INCOME BEFORE INCOME 909,497 1,994,004 3,432,629 15,355,238
TAXES
PROVISION FOR INCOME 404,717 576,341 1,436,211 2,983,158
TAXES
NET INCOME 504,780 1,417,663 1,996,418 12,372,080
OTHER COMPREHENSIVE
INCOME
Foreign currency
translation 662,084 714,277 653,710 2,543,636
adjustment
COMPREHENSIVE INCOME $ 1,166,864 $ 2,131,940 $ 2,650,128 $ 14,915,716
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
Basic and diluted 21,121,372 21,090,948 21,121,372 21,090,948
EARNINGS PER SHARE
Basic and diluted $ 0.02 $ 0.07 $ 0.09 $ 0.59
SINOCOKING COAL AND COKE CHEMICAL INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
March 31, June 30,
2013 2012
CURRENT ASSETS
Cash $ 2,081,078 $ 2,366,718
Restricted cash 16,064,000 9,668,000
Accounts receivable, trade, net 8,382,172 12,017,231
Notes receivable, trade - 14,176,800
Notes receivable, mine acquisition - 9,155,520
Other receivables 4,398,235 1,412,008
Loans receivable 17,596,037 9,849,937
Refundable deposit 4,782,000 4,752,000
Inventories 3,015,779 2,382,444
Advances to suppliers 9,677,328 12,267,806
Prepaid expenses 2,702 633,313
Total current assets 65,999,331 78,681,777
PLANT AND EQUIPMENT, net 15,372,456 16,211,984
CONSTRUCTION IN PROGRESS 39,628,161 39,379,553
OTHER ASSETS
Prepayments 61,134,100 36,071,853
Intangible assets, net 31,783,145 31,635,487
Long-term investments 2,843,569 2,825,730
Other assets 111,580 110,880
Total other assets 95,872,394 70,643,950
Total assets $ 216,872,342 $ 204,917,264
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short term loan - bank $ 15,302,400 $ 5,702,400
Current maturity of long term loan 23,910,000 20,592,000
Accounts payable, trade - 4,023
Notes payable 9,564,000 4,752,000
Other payables and accrued liabilities 1,241,572 802,028
Other payables - related parties 167,787 156,227
Acquisition payable 4,622,600 4,593,600
Customer deposits 126,018 138,457
Taxes payable 1,089,367 1,522,062
Total current liabilities 56,023,744 38,262,797
LONG TERM LIABILITIES
Long term loan 28,692,000 36,432,000
Warrants liability 651 716,648
Total long term liabilities 28,692,651 37,148,648
Total liabilities 84,716,395 75,411,445
COMMITMENTS AND CONTINGENCIES
EQUITY
Common stock, $0.001 par value, 100,000,000
shares authorized, 21,121,372 shares issued and 21,121 21,121
outstanding
Additional paid-in capital 3,592,053 3,592,053
Statutory reserves 3,689,941 3,689,941
Retained earnings 112,253,550 110,257,132
Accumulated other comprehensive income 8,267,682 7,613,972
Total SinoCoking Coal and Coke Chemicals 127,824,347 125,174,219
Industries, Inc's equity
NONCONTROLLING INTERESTS 4,331,600 4,331,600
Total equity 132,155,947 129,505,819
Total liabilities and equity $ 216,872,342 $ 204,917,264
SOURCE SinoCoking Coal and Coke Chemical Industries, Inc.
Website: http://www.sinocokingchina.com